Residents need relief from high cost of living

THE unsettling news that Hawaii's residents are burdened with the highest inflation rate in the nation should serve as a wake-up call to state legislators. Clearly, we must take action now to bring down the cost of living, and the quickest way to accomplish this is granting substantial tax relief to Hawaii's working families. That is why I pushed hard to return at least half of the state surplus, almost $300 million, to taxpayers this year.

That is why I was disappointed when the Legislature decided to grant less than $50 million in tax relief and delayed the start date for this relief until next year.

According to the U.S. Department of Labor's Consumer Price Index, inflation rose 5.8 percent in Honolulu during the first half of 2006, compared to the same period last year. Not only do we lead the country in this dubious category, but Oahu prices shot up at their fastest pace in the last 15 years.

The culprits? As you would expect, inflation was driven in large part by soaring prices for gasoline, electricity and housing. The state is taking much-needed steps to address these challenges, such as developing alternative energy sources, addressing the automatic pass-through of oil price changes to consumers on their electric bills and increasing the amount of affordable housing. But these are longer-term solutions and our people need relief today.

To be sure, personal income is on the rise for many Oahu residents as our state economy continues to expand. However, it's hard to save money and plan for the future when that salary boost gets eaten away by painfully high gasoline prices, apartment rents and tax bills.

Then there are those who have minimum-wage jobs or no job at all. When you're struggling to make ends meet, inflation makes life that much tougher.

During this past legislative session, and in previous sessions, my administration proposed three major tax cuts. First, I recommended increasing the standard deduction to 75 percent of the federal level. The state's standard deduction has not changed in 17 years. I also proposed linking this to widening the tax brackets by 25 percent. Together these two proposals would have reduced the tax burden on more than 80 percent of taxpayers and their dependents.

The second piece of my tax relief package was a one-time immediate tax refund to each resident taxpayer and their dependents. A couple with two children would have received $600 in the form of a check to help them immediately offset the effect of inflation on their pocketbooks.

The third piece is my long-standing effort to offset the impact of the general excise tax on food, medical services and nonprescription drugs for residents earning $50,000 or less. As I have said many times, people should not be taxed for eating and getting sick.

Together these simple commonsense proposals would have returned $285 million to the residents of Hawaii. A family of four earning $50,000 or less would have received $1,568 in funds to offset the inflationary effects of higher prices. Regrettably the $50 million passed by the Legislature will barely make a dent in anyone's cost of living.

Hawaii residents are among the most overtaxed people in America, and now we're being hit the hardest by inflationary pressures. Fighting inflation through meaningful tax relief is the right thing to do, and now, more than ever, is the right time to do it. I hope my colleagues in the House and Senate will join me in enacting real tax relief for each and every resident of our fine state.